0000950149-95-000492.txt : 19950818 0000950149-95-000492.hdr.sgml : 19950818 ACCESSION NUMBER: 0000950149-95-000492 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: IEA INCOME FUND IX L P CENTRAL INDEX KEY: 0000836972 STANDARD INDUSTRIAL CLASSIFICATION: 4400 IRS NUMBER: 943069954 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18169 FILM NUMBER: 95561334 BUSINESS ADDRESS: STREET 1: 444 MARKET ST 15TH FLR STREET 2: C/O INTERMODAL EQUIPMENT ASSOCIATE CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 4156778990 10-Q 1 FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 1995 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO -------- -------- Commission file number 0-18169 IEA INCOME FUND IX, L.P. (Exact name of registrant as specified in its charter) California 94-3069954 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 444 Market Street, 15th Floor, San Francisco, California 94111 (Address of principal executive offices) (Zip Code) (415) 677-8990 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . --- --- 2 IEA INCOME FUND IX, L.P. REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995 TABLE OF CONTENTS
PAGE PART I - FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets - June 30, 1995 (unaudited) and December 31, 1994 2 Statements of Operations for the three and six months ended June 30, 1995 and 1994 3 (unaudited) Statements of Cash Flows for the six months ended June 30, 1995 and 1994 4 (unaudited) Notes to Financial Statements (unaudited) 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of 8 Operations PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 9
3 PART I - FINANCIAL INFORMATION Item 1. Financial Statements Presented herein are the Registrant's balance sheets as of June 30, 1995 and December 31, 1994, statements of operations for the three and six months ended June 30, 1995 and 1994, and statements of cash flows for the six months ended June 30, 1995 and 1994. 4 IEA INCOME FUND IX, L.P. BALANCE SHEETS (UNAUDITED)
June 30, December 31, 1995 1994 ----------- ------------ Assets Current assets: Cash, includes $165,700 at June 30, 1995 and $153,740 at December 31, 1994 in interest-bearing accounts $ 272,672 $ 165,586 Short-term investments 902,220 860,000 Net lease receivables due from Leasing Company (notes 1 and 2) 664,197 764,902 ------------ ------------ Total current assets 1,839,089 1,790,488 ------------ ------------ Container rental equipment, at cost 17,223,102 17,342,153 Less accumulated depreciation 5,654,838 5,193,717 ------------ ------------ Net container rental equipment 11,568,264 12,148,436 ------------ ------------ $ 13,407,353 $ 13,938,924 ============ ============ Liabilities and Partners' Capital ------------ Current liabilities: Due to general partner and its affiliates (notes 1 and 3) $ 20,279 $ 23,446 ------------ ------------ Total current liabilities 20,279 23,446 ------------ ------------ Due to general partner, net (note 3) 7,384 17,981 ------------ ------------ Total liabilities 27,663 41,427 ------------ ------------ Partners' capital (deficit): General partner (5,276) (9,778) Limited partners 13,384,966 13,907,275 ------------ ------------ Total partners' capital 13,379,690 13,897,497 ------------ ------------ $ 13,407,353 $ 13,938,924 ============ ============
The accompanying notes are an integral part of these statements. 2 5 IEA INCOME FUND IX, L.P. STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Six Months Ended ------------------------ --------------------------- June 30, June 30, June 30, June 30, 1995 1994 1995 1994 ------------------------ ---------- ---------- Net lease revenue (note 4) $691,769 $681,015 $1,354,538 $1,329,314 Other operating expenses: Depreciation 251,555 261,256 504,708 535,407 Other general and administrative expenses 18,591 16,682 30,239 25,464 -------- -------- ---------- ---------- 270,146 277,938 534,947 560,871 -------- -------- ---------- ---------- Earnings from operations 421,623 403,077 819,591 768,443 Other income: Interest income 17,666 8,415 33,259 15,315 Net gain on disposal of equipment 4,849 3,485 12,254 61,093 -------- -------- ---------- ---------- 22,515 11,900 45,513 76,408 -------- -------- ---------- ---------- Net earnings $444,138 $414,977 $ 865,104 $ 844,851 ======== ======== ========== ========== Allocation of net earnings: General partner $ 33,627 $ 31,706 $ 70,214 $ 63,484 Limited partners 410,511 383,271 794,890 781,367 -------- -------- ---------- ---------- $444,138 $414,977 $ 865,104 $ 844,851 ======== ======== ========== ========== Limited partners' per unit share of net earnings $ 12 $ 11 $ 23 $ 23 ======== ======== ========== ==========
The accompanying notes are an integral part of these statements. 3 6 IEA INCOME FUND IX, L.P. STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended ------------------------------ June 30, June 30, 1995 1994 ----------- ----------- Net cash provided by operating activities $ 1,511,603 $ 1,241,826 Cash flows provided by (used in) investing activities: Proceeds from sale of container rental equipment 34,377 61,065 Acquisition fees paid to general partner (13,764) (15,237) ----------- ----------- Net cash provided by investing activities 20,613 45,828 ----------- ----------- Cash flows used in financing activities: Distribution to partners (1,382,910) (1,295,265) ----------- ----------- Net increase (decrease) in cash and cash equivalents 149,306 (7,611) Cash and cash equivalents at January 1 1,025,586 987,057 ----------- ----------- Cash and cash equivalents at June 30 $ 1,174,892 $ 979,446 =========== ===========
The accompanying notes are an integral part of these statements. 4 7 IEA INCOME FUND IX, L.P. NOTES TO UNAUDITED FINANCIAL STATEMENTS JUNE 30, 1995 AND DECEMBER 31, 1994 (1) Summary of Significant Accounting Policies (a) Nature of Operations IEA Income Fund IX, L.P. (the "Partnership") is a limited partnership organized under the laws of the State of California on June 8, 1988 for the purpose of owning and leasing marine cargo containers. Cronos Capital Corp. ("CCC") is the general partner and, with its affiliate Cronos Containers Limited (the "Leasing Company"), manages and controls the business of the Partnership. (b) Leasing Company and Leasing Agent Agreement Pursuant to the Limited Partnership Agreement of the Partnership, all authority to administer the business of the Partnership is vested in CCC. CCC has entered into a Leasing Agent Agreement whereby the Leasing Company has the responsibility to manage the leasing operations of all equipment owned by the Partnership. Pursuant to the Agreement, the Leasing Company is responsible for leasing, managing and re-leasing the Partnership's containers to ocean carriers and has full discretion over which ocean carriers and suppliers of goods and services it may deal with. The Leasing Agent Agreement permits the Leasing Company to use the containers owned by the Partnership, together with other containers owned or managed by the Leasing Company and its affiliates, as part of a single fleet operated without regard to ownership. Since the Leasing Agent Agreement meets the definition of an operating lease in Statement of Financial Accounting Standards (SFAS) No. 13, it is accounted for as a lease under which the Partnership is lessor and the Leasing Company is lessee. The Leasing Agent Agreement generally provides that the Leasing Company will make payments to the Partnership based upon rentals collected from ocean carriers after deducting direct operating expenses and management fees to CCC. The Leasing Company leases containers to ocean carriers, generally under operating leases which are either master leases or term leases (mostly two to five years). Master leases do not specify the exact number of containers to be leased or the term that each container will remain on hire but allow the ocean carrier to pick up and drop off containers at various locations; rentals are based upon the number of containers used and the applicable per-diem rate. Accordingly, rentals under master leases are all variable and contingent upon the number of containers used. Most containers are leased to ocean carriers under master leases; leasing agreements with fixed payment terms are not material to the financial statements. Since there are no material minimum lease rentals, no disclosure of minimum lease rentals is provided in these financial statements. (c) Basis of Accounting The Partnership utilizes the accrual method of accounting. Revenue is recognized when earned. (d) Financial Statement Presentation These financial statements have been prepared without audit. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting procedures have been omitted. It is suggested that these financial statements be read in conjunction with the financial statements and accompanying notes in the Partnership's latest annual report on Form 10-K. The interim financial statements presented herewith reflect all adjustments of a normal recurring nature which are, in the opinion of management, necessary to a fair statement of the financial condition and results of operations for the interim periods presented. (Continued) 5 8 IEA INCOME FUND IX, L.P. NOTES TO UNAUDITED FINANCIAL STATEMENTS (2) Net Lease Receivables Due from Leasing Company Net lease receivables due from the Leasing Company are determined by deducting direct operating payables and accrued expenses, base management fees payable, and reimbursed administrative expenses payable to CCC and its affiliates from the rental billings payable by the Leasing Company to the Partnership under operating leases to ocean carriers for the containers owned by the Partnership. Net lease receivables at June 30, 1995 and December 31, 1994 were as follows:
June 30, December 31, 1995 1994 ---------- ------------ Lease receivables, net of doubtful accounts of $85,290 at June 30, 1995 and $99,397 at December 31, 1994 $1,023,855 $1,070,802 Less: Direct operating payables and accrued expenses 159,020 92,447 Damage protection reserve 99,308 105,706 Base management fees 91,403 91,504 Reimbursed administrative expenses 9,927 16,243 ---------- ---------- $ 664,197 $ 764,902 ========== ==========
(3) Due to General Partner The amounts due to CCC at June 30, 1995 and December 31, 1994, were as follows:
June 30, December 31, 1995 1994 -------- ------------ Acquisition fees $27,627 $41,427 Less: Non-current portion of acquisition fees, payable in equal annual installments through 1997 7,348 17,981 ------- ------- Total due to general partner, current $20,279 $23,446 ======= =======
(Continued) 6 9 IEA INCOME FUND IX, L.P. NOTES TO UNAUDITED FINANCIAL STATEMENTS (4) Net Lease Revenue Net lease revenue is determined by deducting direct operating expenses, management fees and reimbursed administrative expenses to CCC from the rental revenue billed by the Leasing Company under operating leases to ocean carriers for the containers owned by the Partnership. Net lease revenue for the three and six-month periods ended June 30, 1995 and 1994, were as follows:
Three Months Ended Six Months Ended ----------------------- --------------------------- June 30, June 30, June 30, June 30, 1995 1994 1995 1994 --------- ---------- ----------- ------------ Rental revenue $ 949,890 $ 911,067 $ 1,867,698 $ 1,799,434 Rental equipment operating expenses 146,210 119,437 290,175 244,927 Base management fees 63,357 66,149 127,357 122,582 Reimbursed administrative expenses 48,554 44,466 95,628 102,611 --------- -------- ----------- ----------- $ 691,769 $ 681,015 $ 1,354,538 $ 1,329,314 ========= ========= =========== ===========
7 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations It is suggested that the following discussion be read in conjunction with the Registrant's most recent annual report on Form 10-K. 1) Material changes in financial condition between June 30, 1995 and December 31, 1994. During the first six months of 1995, the Registrant's collection of outstanding lease receivables and sales proceeds has been favorable, contributing to a $149,306 increase in cash and cash equivalents, and a $100,705 decline in net lease receivables due from the Leasing Company. Additionally, direct operating payables and accrued expense, a component of net lease receivables, increased $66,573. This increase results from a $42,955 increase in accrued operating expenses and a $23,618 increase in deferred revenue from advance billings to container lessees. The Registrant's cash balances at June 30, 1995 also included sales proceeds from equipment disposals in the amount of approximately $12,000. The Registrant will distribute this amount and additional sales proceeds in subsequent periods, as deemed appropriate by the General Partner. 2) Material changes in the results of operations between the three and six-month periods ended June 30, 1995 and the three and six-month periods ended June 30, 1994. During the three-month period ended June 30, 1995, the container leasing market remained consistent with market conditions that existed during the three-month period ended March 31, 1995. The Registrant continued to experience the ability to charge higher ancillary revenues, such as pick-up fees, and reduce incentives offered to ocean carriers, which contributed to an increase in the Registrant's gross lease revenues, a component of net lease revenues. However, the Registrant remains cautious about any further improvement in market conditions during the remainder of 1995. The benefits of the improved market conditions experienced during the three and six-month periods ended June 30, 1995, as compared to the same periods in 1994, were partially offset by the effect of the Leasing Company's efforts to improve the credit quality of its customer portfolio. In many cases, lessees who maintain a strong credit history may command favorable lease terms including lower per-diem rental rates. Accordingly, average per-diem rental rates remained steady as compared to the same three and six-month periods in 1994, while an increasing proportion of the lessees within its portfolio shifted to larger, high credit quality lessees. The Registrant expects to gain long term benefits from the improvement in the credit quality of its customers, as the allowance for doubtful accounts and related expenses should decline. The Registrant's average fleet size and utilization rates for the three and six-month periods ended June 30, 1995 and 1994 were as follows:
Three Months Ended Six Months Ended ---------------------- ----------------------- June 30, June 30, June 30, June 30, 1995 1994 1995 1994 -------- -------- -------- --------- Average Fleet Size (measured in twenty-foot equivalents (TEU)) 6,972 7,055 6,987 7,057 Average Utilization 91% 91% 91% 90%
Rental equipment operating expenses increased 22% and 18% during the three and six-month periods ended June 30, 1995, respectively, as compared to the same periods in the prior year. These increases were attributable to costs associated with the recovery actions against the doubtful accounts of certain lessees, including legal, container recovery expenses and the related provision for doubtful accounts. 8 11 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27 - Financial Data Schedule (b) There were no reports on Form 8-K during the three-month period ended June 30, 1995. 9 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. IEA INCOME FUND IX, L.P. By Cronos Capital Corp. The General Partner By /s/ JOHN KALLAS ---------------------------------------- John Kallas Vice President, Chief Financial Officer Principal Accounting Officer Date: August 10, 1995 10 13 EXHIBIT INDEX
Exhibit No. Description - --------- ----------- 27 Financial Data Schedule
EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AT JUNE 30, 1995 (UNAUDITED AND THE STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (FINANCIAL STATEMENTS INCLUDED AS PART OF ITS QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 1995. 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 1,174,892 0 664,197 0 0 1,839,089 17,223,102 5,654,838 13,407,353 27,663 0 0 0 0 13,379,690 13,407,353 0 1,400,051 0 534,947 0 0 0 0 0 0 0 0 0 865,104 0 0